“You can cut all the flowers but you cannot keep spring from coming.”
-Pablo Neruda
Here’s what you need to know this week:
- Stocks extend their losing streak to four straight weeks due to the war in Iran
- The Federal Reserve finds itself under pressure from multiple sides
- President Trump attempts to forge a new deal with Iran
Selloff Deepens
Stocks prices have continued to lose ground as the war in Iran takes its toll on investor sentiment. The S&P 500 has now posted four weekly declines in a row, marking the longest such streak since March of last year:
As of the end of last week all three major indices were down 5-6% on the year:
The biggest driver of the selloff is the sharp increase in oil prices. West Texas Intermediate (WTI) Crude is the benchmark for US domestic oil prices; WTI Crude has risen more than 70% this year and clearly has an inverse relationship with stock prices:
Fed Conundrum
Higher oil prices mean higher shipping costs, higher input costs for products like plastics, and more uncertainty for corporations. These pressures reduce profit margins unless corporations decide to raise prices, which in turn raises inflation. Higher oil prices also impact consumers directly through gas prices which also raises the total measure of inflation. Gas prices have risen drastically over the last few weeks and have reached their highest national average in more than four years:
All of this puts the Federal Reserve in a tough position. The Federal Open Market Committee (FOMC) announced on Wednesday that they are holding interest rates steady since inflation has still not fallen closer to their long-term target of 2%. This decision was expected, but remarks from Fed Chairman Jerome Powell implied that interest rates might be higher for longer[1]. In fact, markets are now pricing in zero interest rate cuts in 2026 and bonds are even implying a 14% chance of an interest rate hike in the next three months[2].
All of this comes against the backdrop of Chairman Powell’s ending term and President Trump’s investigation into Powell. Powell has derided the investigation as meritless and politically motivated because the Fed has not cut rates despite President Trump’s wishes. Courts have taken Powell’s side so far in the dispute, throwing out the charges as baseless.
Powell told reporters on Wednesday that he will not leave the Federal Reserve Board until the investigation has resolved. Although his term as Chairman ends in May, his term as board member lasts until 2028 unless he decides to leave early. Additionally, Republican Senator Thom Tillis has announced he will block the confirmation of President Trump’s nominee to replace Powell, Kevin Warsh, until the investigation is resolved. Rising oil prices will only complicate Powell’s replacement further.
Progress?
Stocks rebounded on Monday due to President Trump’s claim of progress in peace talks with Iran. Iranian officials disputed Trump’s announcement and claimed that there have been no direct peace talks. Still, markets decided to treat the possible talks as an optimistic development and gained more than 1% on the day.
As of writing on Tuesday, President Trump is still making overtures towards a peaceful resolution. The prime minister of Pakistan has offered to host peace talks between the US and Iran, and multiple sources have reported that Pakistan has been working as a backchannel for peace negotiations over the past week[3]. Things are developing fast and may be different by the time you read this, but so far markets are treating these talks seriously and positively.
What Else
- Iran struck the world’s largest natural gas refinery in Qatar late last week, potentially causing a bottleneck for natural gas production
- Airline delays and disruptions continue to multiply as Congress fails to reach an agreement on funding the Department of Homeland Security
- Legendary actor Chuck Norris passed away at the age of 86
- The Sweet Sixteen round of March Madness tips off tomorrow
- OSU took second place in the national wrestling championships including three individual championships for true freshmen, an NCAA record
What We’re Reading
A base on the moon? NASA is attempting to bring sci-fi to life by repurposing plans for the Lunar Gateway orbital station into humanity’s first permanent base on the moon. Click below to read NASA’s plan for the base, time line and challenges of building humanity’s first extraterrestrial structure:
What’s Happening Downtown
The Myriad Gardens’ annual Tulip Festival kicks off this Saturday, March 28th. The festival features more than 100,000 tulips planted across the Myriad Gardens and Scissortail Park. This event is free to attend, runs from 9:00 AM to 6:00 PM on both Saturday and Sunday and will also include a market of local vendors, live music and food trucks. Click below to learn more:
To read more from our blog, click here
Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, CFP®, Brandon Ingerson, Bill Daniel, Sam Postich, Jenni Hess
[1] Yahoo! Finance [2] CME Group [3] NBC